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Court Ruling in Favour of Major London Freeholder Upholds High Lease Extension Costs

The Court of Appeal have ruled in favour of a major London freeholder, crushing the hopes of campaigners' long-running legal battle to reduce leasehold costs.


The decision between Mundy's property lawyers and the Sloane Stanley Estate - which upholds a previous verdict by the Upper Tribunal (Lands Chamber) in May 2016 - was centred around a small flat in Chelsea whereby the lease had fallen to less than 23 years and the freeholder was requesting £420,000 for the lease extension premium.


Campaigners had hoped that a ruling in their favour against one of Britain’s richest men, the Duke of Westminster, could slice the cost of extending a lease or buying a freehold by as much as half. However, the court ruled in favour of the Sloane Stanley Estate and against a decision which would have benefited approximately 2 million households across England and Wales.


Currently, Gerald Eve graphs - typically referred to as “relativity graphs” - are currently used by property experts to set the value of short leases relative to the freehold.


However, chartered surveyor and advocate for leasehold reform, James Wyatt of Parthenia Valuation, who led the campaign, argued that the current lease valuation system commissioned on behalf of the Duke of Westminster more than 20 years ago was now invalid and that freeholders have been padding the costs of lease extensions by up to 50% for years. To replace this now archaic system, Wyatt challenged the vested interests in leasehold with a rather more robust and statistical analysis of untainted market evidence to value lease extensions and enfranchisement.


But in a unanimous ruling, the judges refused to leave the ruling to appeal and awarded costs against Mundy. Pemberton Greenish, the lawyers acting on behalf of the Sloane Stanley Estate, said the Parthenia valuation model proposed by Wyatt was now “consigned to history”.


This ruling is a marked step in the wrong direction and contradicts an announcement made by the Department for Communities and Local Government in December 2017 which said that it would be “working with the Law Commission to make the process of purchasing a freehold or extending a lease much easier, faster and cheaper”. 


But for Wyatt, the battle is far from over. Speaking after the court decision, he said: “Now we need the government to act. Sir Peter Bottomley MP said that if the court of appeal did not overturn the decision, parliament will prescribe relativity by statute.”